Options activity provides a look at expectations on AAPL, MU and AMZN

U.S. stock futures are trading broadly higher this morning. Wall Street was bolstered by news that North and South Korea would hold their first summit meeting in more than a decade. Additionally, industrials got a lift as resistance to President Donald Trump’s tariff plan mounted from key House Republicans, including Speaker Paul Ryan.

Heading into the open, Dow Jones Industrial Average futures have added 0.56%, S&P 500 futures are up 0.40% and Nasdaq-100 futures have gained 0.59%.

Turning to the options pits, equity option volume retreated from Friday’s binge. Levels returned to normal, with about 17.2 million calls and 14.5 million puts changing hands. The CBOE single-session equity put/call volume ratio plummeted to 0.55. The 10-day moving average ticked higher to 0.64.

Taking a closer look at yesterday’s options activity, Apple Inc. (NASDAQ:AAPL) attracted put attention in the wake of a string of negative analyst comments. Elsewhere, Micron Technology, Inc. (NASDAQ:MU) saw call option volume explode as the shares topped $50 for the first time in 17 years. Finally, Amazon.com, Inc. (NASDAQ:AMZN) drew speculation on news it was looking at offering a checking-like product.

Apple Inc. (AAPL)

Apple HomePod sales are mediocre and iPhone sales are weak. That pretty well sums up what analysts have said about Apple in the past several days. On Friday, JPMorgan cut its iPhone X production expectations to 15 million units in the first quarter, down from 20 million. Analysts also drop their second-quarter production targets to 10 million from 18 million units.

On Saturday, KGI Securities called HomePod demand “mediocre,” while Baird said on Monday that smartphone demand was “tepid.”

The negativity had a noticeable impact on Apple’s option volume on Monday. More than 654,000 contracts traded on AAPL stock, with calls only managing 55% of the day’s take. Apple typically sees call volume in excess of 60% to 63% of total daily volume.

Furthermore, the back-month April options series continues to show signs of rising pessimism. The April put/call open interest ratio has risen steadily for the past several weeks, arriving today at 0.77. It’s also worth noting that this negativity is rising alongside Apple’s stagnation between support at $170 and resistance near $180.

Micron Technology, Inc. (MU)

Optimism appears to be mounting ahead of Micron’s March 22 trip to the earnings confessional. The company is expected to post a profit of $2.69 per share on revenue of $6.79 billion.

Micron stock options speculators are also out in force. Volume yesterday jumped to 259,000 contracts, with calls making up 73% of the day’s take. Overall, Micron’s March 23 options implieds are pricing in a nearly 10% post-earnings move for the stock. This places the upper bound at $57 and the lower at about $47.

Amazon.com, Inc. (AMZN)

Amazon is looking at entering the banking world. The company is reportedly in talks with JPMorgan Chase & Co. (NYSE:JPM) and Capital One Financial Corp. (NYSE:COF) to offer a checking-like service.

The move is designed to help Amazon reach customers without credit cards or traditional banking services. Right now, more than a quarter of U.S. households have no or limited access to checking and savings accounts, CNBC reports.

Amazon stock options traders cheered the news yesterday, even as they chase AMZN shares north of $1,500. Volume came in at about 201,000 contracts, with calls claiming an above average 53% of the day’s take. Amazon typically sees call volume in the 50% to 51% range.

Looking ahead to the April series, we find optimism growing on Amazon stock. Specifically, the April put/call OI ratio has fallen to a reading of 0.65, which is among the lowest such monthly readings taking in the past year.

As of this writing, Joseph Hargett was long on Micron Technology, Inc. (MU) stock.